Showdown 1: Security/Stability

This is part one of a series exploring factors in self-employment and traditional employment. For more about this series, read the opening article.

Security/Stability

How reliable your paycheck and position is

Self

Boss

Pros

Cons

Pros

Cons

You decide how and when to get paid

You control where the money comes from and how it is used

Nobody can fire you

If money isn’t there, you may have to skip paychecks

Startups usually run lean, which means you’re susceptible to fluctuations in business

Startups are more likely to shift business models

Long-standing businesses are likely to withstand fluctuations in the market

Often, there’s less pressure to bring your A game all the time

Layoffs are a common way to cut costs

Big businesses can still implode (see Enron)

Conclusions

I think the major point from the pros and cons is this: Startups are more susceptible to fluctuations. When my business had unexpected expenses, business was slow, or a key client paid late, we had to skip payroll. When things were going great, it was easy – success keeps you going. But the hardest times were the months where we knew we didn’t have enough cash to pay ourselves. When your mortgage payment relies on the month-to-month income from your business, a small variation can have disastrous effects.

Once you’re on your feet and have a reservoir to cover payroll (or have outside funding) little factors like a client paying a week late won’t matter quite so much. But until that time, you’re in startup mode – and stability is a major weakness.